Cleantech is Seeking Creative Entrepreneurs

Save for the era of Thomas Edison, it has never been a better time to be an energy entrepreneur, especially in the United States. A new generation of forward-thinking entrepreneurs are making leaps and bounds as global regions update their energy infrastructure with new, “smart,” and “clean” elements. The “smart grid,” which is essentially an “energy Internet,” and “cleantech” are hitting their strides as both consumers and electricity providers begin to see tangible benefits.

Many entrepreneurs will agree that energy in general and clean technology in particular present unique sets of challenges to technology commercialization – capital investments required are usually large, scale adoptions take a relatively long time, and policies and regulatory uncertainties create their own sets of challenges.

In today’s lean economic climate, what alternative strategies should entrepreneurs look for to bring their technology to successful commercialization?

As a workshop discussion leader at the recent MIT Energy Conference, I led an engaging discussion among researchers, entrepreneurs, investors and corporations to discuss and evaluate strategies for navigating the current landscape. We sought ways to confront a historically tight funding environment and an economy that demands we “do more with less.” Some of the discussions explored how alternative strategies such as partnerships with large strategic players, "lean" product development, or risk-sharing at the proof-of-concept phase can help early-stage ventures succeed in lieu of the traditional fundraising and operational models.

Here are some of the highlights of those discussions that I hope will provide a generation of budding inventors and entrepreneurs with practical lessons and strategies to call upon as they move forward with ventures of their own.

For those who are in very early stages of their ventures, explore alternative sources of funding such as government grants (both from the state and federal governments in the US; and from foreign governments), before pursuing traditional venture capital. Use simulations and small pilots to test proof-of-concepts and create a technology platform that is modular and can be flexible with changing demands and environments. Given the nature of the energy industry – risk-averse, slow-moving, and regulatory-driven – incremental improvements may sometimes be favored compared to disruptive technologies.

Next, find a large customer and/or partner with a strong need for your technology who is willing to work with you through pilots and tests. The large customer’s or partner’s strong balance sheet, reputation, manufacturing capability, and distribution channels can create tremendous synergies that your technology alone will not be able to realize. Have a good IP strategy and understand that everyone is committed to be in it for the long haul as payoff may not happen until later down the road. Sometimes, this large customer or partner may be the military or the government. Other times, they can be the incumbents such as utilities and large industrial conglomerates.

Many people draw similarities between the energy industry and the healthcare industry, as both provide essential service to society and require large capital investments and strong policy leadership. In my opinion, there is a small, but important difference – energy is a commodity, while healthcare is not. Given that energy is a commodity, the industry needs an even stronger policy leadership from the government. For the clean energy industry to succeed, it needs the strategic focus and resolve of the government to support a comprehensive clean energy policy – from R&D, to manufacturing, to deployments, to workforce training. We also need full alignments between the state and federal governments to reduce the regulatory complexities and uncertainties. Our energy policies seem to be short-term focused, oftentimes dependent on election cycles. To keep America competitive in the global economy, we need longer-term energy policies. China, for example, has committed to invest ~$20 billion annually from now until 2020 in a comprehensive clean energy plan. In contrast, the United States does not have a comprehensive clean energy policy and is outspent by China by a ratio of approximately 4 to 1.

I personally believe that the spirit of innovation is well and alive in the American energy sector and we have the opportunity to not only develop a strong domestic clean energy economy, but also to export that American ingenuity abroad and lead the world.

Sonita Lontoh is a Silicon Valley-based technology executive focusing on Smart Connected Energy and Internet of Things (IoT). In particular, she focuses on how to educate consumers and the general public on the benefits of smart connected energy to help accelerate global adoptions. She is a frequent speaker/contributor on smart energy, technology, and cross-border collaboration and leadership ...

We began in 2009 with enough private investment to bring a prototype to a stategic partner with deep pockets and a strong balance sheet. As you've suggested, they became a valuable partner, allowing us to test and perfect our product...even suggesting certain improvements.

They recently became our first paying customer and the relationship providesexcellent market validation to springboard future sales because they are a leader in THEIR industry.

Only just now are we exploring opportunities to raise capital for growth.

I'll admit we are not working on cold fusion here, but our product is a PV solar solution that could potentially replace thousands of street lights on roadwaysin the U.S. and around the world.

We came into this as entrepreneurs FIRST, so perhaps we inherently understood the need for EARLY market validation.

It isn't about "starting ventures," it's about solving the problem. Instead of encouraging people to start companies that are "green," what about a solution? We have lost our collective focus.

Sooner or later somebody has to say it "Americans have become fat and lazy - literally and in terms of what we're willing to take on. We could lead the World and restore our economy, if we focused on solving problems. Regardingjob-creation, it will never come from government programs (especially subsidies) and it never has.

As a nation we have lazily become very incremental about everything, including innovation. Small steps are all we’re willing to even consider. SOLVE problems with economically-viable solutions and the resulting "demand" will create jobs.

Solve something. THAT will make a difference. Cleane energy schemes, like most wind and solar deals have NOT made a measurable difference. Despitea $1.5 trillion investment in the last 10 years, new demand is more than 3X all new "clean energy."

Andrew and Jim, you both are right. It's not about being an entrepreneur per se, but about being an entrepreneur who solves big problems. Those who solve the biggest problems are usually the greatest rewarded as well. Not only in financial terms, but also in human satisfaction terms.

The major consequences of climate change will be sea level rise and the effects on marine life; particularly phytoplankton that are the base of the ocean food chain and the lungs of the planet. It is believed the Earth’s atmosphere was oxygen free until phytoplankton evolved and that the stocks of these essential life forms have declined by 40 percent since 1950 as a result of ocean warming.

The cause of the problem is also the solution to the energy problem.

Eighteen times more heat has accumulated in the oceans due to climate change than in the atmosphere. The thermal inertia of the oceans means the effects of climate change will be ongoing for 1000 years even after we stop putting greenhouse gases in the atmosphere.

The only way this can be reversed is to convert as much of the oceans excess heat to energy as possoible.

Ocean thermal energy conversion (OTEC) is the means to doing this and when implemented correctly can draw down atmospheric carbon because colder water absorbs more CO2.

The energy storage problem associated with wind and solar are not a factor with OTEC because the oceans are the largest solar collector on the planet and the deep oceans are the largest heat sink accessible.

Both a hot a cold reservoir are required to produce energy in any thermal process so we should be using the largest availabe sources of both and in the process mitigating the damage that is already built in.

I've been a successful alternative/renewable energy-cleantech entrepreneur for over 30 years, and I have to tell you, every year has been harder than the last.

This is not the best of times, it is the worst.

Certainly the need for innovation in the energy sector is at its highest point ever, but venture, corporate and bank funding is at the lowest level I have ever experienced. The DOE is a hopelessly unreliable partner than often does more harm than good. Couple that with under-the-radar pushback from the incumbent utilties who are starting to feel threatened, and in-your-face public pushback from the anti-science crowd led by Fox News, and its a pretty tough environment.

When you consider the well-coordinated and financed efforts of many, many other countries in Asia and Europe, the idea that a few gritty entrepreneurs can pull the United States to the front of the pack is worse than a pipedream.

If you actually read the facts cited in your blog, you'll see your conclusions are supported only by blind optimism. Right now, I'm just hoping the US can stay ahead of Uzbekistan. Got my fingers crossed on that one.

I do share your frustrations on the lack of strategic focus and resolve of the US in enabling real clean technology progress. Having said that, I have to put faith that the US government will have to eventually have that strategic focus and resolve as they will have no other choice if they want to stay competitive in the global world. Keeping my fingers crossed.

"For those who are in very early stages of their ventures, explore alternative sources of funding such as government grants (both from the state and federal governments in the US; and from foreign governments), before pursuing traditional venture capital."

Hi Sonita,

This sounds great but reality sucks....

I have a market disrupting new energy technology; my invention is called the gravity rectifier.

You’re probably correct about traditional venture capital being difficult to come by. I've taken my new technology to CleanTech Innovator meetings put on by Berkeley's Haas Business School in Silicon Valley several times to pursue funding from traditional venture capital for my innovation to no avail. Also I have applied for US DOE funding but it seems that the Solyndra's of the world have cut in line for that government stimulus funding for innovation because of corporate cronyism.

So while I appreciate your views on government funding of innovation my experience has found any reliance on such to be miss-placed.